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Trade war

US soybean farmers promote 'Grown in USA' as trade war bites

Edamame is booming as a high-end food, but dependence on China hurts bulk exporters

Edamame, a form of soybean, is becoming increasingly popular in restaurants across the U.S.

NEW YORK -- Every spring for the past five years, Americans have gathered in the small town of Mulberry, Arkansas, for a festival in celebration of an all-American snack: edamame.

Edamame -- the Japanese word for these young soybeans, often eaten with salt straight from the pod -- is not the sort of food one might expect to find at the center of a festival in Arkansas accompanying a barbecue cookout and an antique car show. Most Americans' first exposure to the snack is as an appetizer in Asian restaurants. In fact, China still provides a large share of the edamame that finds its way into American bowls.

But as health-conscious consumers drive demand for soy foods and other plant proteins, there is also a growing desire for those products to be "grown in the U.S.A.," a surprisingly elusive label in a country that last year held the title of the world's top producer of soybeans.

Ray Chung, president of Greenwave Foods, based right in Mulberry, sees a bright future for edamame in the U.S. Greenwave is the first and only company in the country dedicated exclusively to the production of the bean.

"I think it's really moved beyond sort of an Asian specialty item, and it's becoming much more mainstream," Chung said in a phone interview with Nikkei Asian Review, noting that edamame can be found at just about any supermarket in the country now. "I think enough Americans are aware of it -- that it's a great source of protein," he said.

What Chung seeks to offer consumers through Greenwave's farm and processing plant is transparency. "We built this company to address concerns that a lot of people have about food safety issues and quality as well," he said.

Some American customers have concerns about weaker food safety regulations in Asia, noted Chung, who is of Chinese descent. "Edamame customers have a very high standard. And we're focused on making sure we can meet that standard for quality and appearance and flavor as well."

The U.S. produced some 119 million tons of soybeans last year. Most American soybeans -- more than 90% of them -- are genetically modified, and the majority end up processed for animal feed and oil.

Food-grade soybeans, on the other hand, make up only a tiny fraction of U.S. production. Niche specialty beans for human consumption such as edamame, which are bred and cultivated specifically to produce large, sweet beans, are generally produced as non-GMO crops and will command a higher price if they can be labeled as "organic."

A 2017 consumer attitudes study released by the Missouri-based United Soybean Board found that soy consumption is up 8% since 2011, with 47% of millennials surveyed reporting having included soy in their diets at least once a week. A 2017 report by London-based market research company Technavio estimated the U.S. soy food market was valued at  $14.92 billion and predicted the market would reach $16.78 billion in revenue by 2021, growing at a compound annual growth rate of 2.38%.

But the requirements for organic farming, high overhead costs and labor-intensiveness at a time of farm labor shortages rule out the option for many farmers, despite the pull of premiums that come with growing demand for soy foods.

Most farmers opt instead for lower-maintenance genetically modified varieties, which, in turn, make up the bulk of U.S. soybean exports.

North Asia accounts for 68% of U.S. soybean exports, 60% of which are directed toward China, according to the U.S. Soybean Export Council. Despite China's provision of food-grade soybeans to U.S. consumers, nearly one third of all soybeans grown in the U.S. were sold last year to China, where the rising middle class is feeding demand for meat from soy-fed animals.

But now, that dependence on the Chinese market is coming back to bite as American soybean farmers are becoming some of the first and hardest-hit victims of the U.S.-China trade war.  

Rob Shaffer, a fourth-generation Illinois farmer and national director of an industry lobby called the American Soybean Board, has already seen a loss of $2.50 a bushel since China imposed retaliatory tariffs on the U.S. earlier this month.

Farmers like him had been concerned during the months of trade war posturing that soybean prices would drop, but had hoped "cooler heads would prevail between China and the U.S. administration," he said. "We didn't think it would actually come to fruition on the 6th of July," he said. "But obviously it did, and we've lost 25% on the price of soybeans."

When the market start to decline, bringing bushel prices down by $1, there was still some hope that the situation would stabilize, Shaffer said. "But now that we're down over $2.50," he says his fellow farmers began asking, "How are we going to survive?"

A $12 billion aid package for impacted U.S. farmers was announced by the Department of Agriculture on Tuesday to help "meet the costs of disrupted markets." But this short-term fix is unlikely to placate farmers who have spent decades cultivating a trade relationship with Beijing.

"We want free trade, not aid," Shaffer said. "We've been building this relationship for 40 years," and once that connection with China is lost, it won't be easy to regain.

Soybean market analyst John Baize, a consultant for the U.S. Soybean Export Council, says the tariffs will be "painful" for farmers' income, "but we will weather the storm." World demand for soybeans is growing at about 14 million tons per year, Baize says, and now that U.S. soybeans are essentially "on sale," other buyers in Asia or Europe will fill China's shoes.

"If a net result of this is that a year or two down the road we're still exporting as many soybeans as we need to export and we're shipping a lot less to China, that's not a bad thing," Shaffer suggested. "Because when you export 60% of your soybeans to one buyer, you really are at their mercy."

As for U.S. consumers of soy foods, perhaps the trade war will add a new incentive to buy American.

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